Many first-time home buyers are unaware of the property settlement process. Buying a property involves many steps, one of which is the settlement process. When purchasing a property, your agent and conveyancer take care of everything and ensure the property transaction is legal.
However, as the future property owner, you must also understand the ins and outs of the settlement process. So, how long does settlement take when buying a property, find out in this article!
What is property settlement?
Property settlement refers to the legal procedure in which the ownership of a piece of real estate is transferred from the seller to the buyer. This process is typically carried out by representatives of both parties and includes the exchange of funds for the property and the transfer of legal documents.
The terms of the settlement, such as the transfer of ownership and any contingencies, are usually negotiated and agreed upon prior to the completion of the process. This is why you should know all the steps when buying your first home.
A settlement process may involve these steps:
- Conducting an inspection
- Evaluating and signing the property documents
- Filing the transfer of ownership in the relevant government office
- Making the final purchase payment to the seller
All these steps occur before the home buyer gets legal possession of the home. A representative for the homebuyer can verify all details and discuss the terms of the agreement regarding the settlement period with the seller.
During negotiation, the home buyer can request a longer settlement period if there’s more paperwork required.
When does property settlement start and how long does it take?
The settlement period is normally 30 to 90 days. The property settlement period begins when the contract of sale is signed. The settlement date is set by the seller and agreed upon by the homebuyer, and it is mentioned in the contract of sale.
The settlement day is when the whole settlement process ends. This is when the homebuyer will have legal possession of the home, and the previous owner performs a property sale.
On the settlement day, the home buyer’s representative will meet the seller’s representative and exchange the documents. Here’s what happens on settlement day:
- The homebuyer pays the amount to the seller to purchase the property
- The seller will hand over the property title and ownership to the new registered owner
- The new owner/home buyer will take possession of the property
During the property settlement process, the new owner has to pay for the costs to cover the settlement. These costs include legal costs, conveyancing fees, transfer or stamp duty, and unpaid lending charges. The exact settlement period depends upon the agreement.
What are the stages of the settlement process?
The duration of the property settlement process also depends on where you live. During this period, the buyer and the seller get time to finalise the paperwork.
The seller prepares to vacate the property, pack stuff, and schedule movers. On the other hand, if required, the buyer finds a lender and prepares to occupy the new property. There are two stages:
- Pre-settlement/ final property inspection
- Settlement day
Before the settlement, the final inspection takes place, during which the home buyer has a chance to inspect the property. The home buyer can look around the property or hire an inspector to ensure everything is in order and in the same condition.
The pre-settlement inspection or final inspection usually occurs around one week before the settlement date.
What happens after settlement?
After the property settlement, the new owner can get the keys from the seller or their financial representatives and take ownership of the property. The homebuyer then pays the land transfer duty. The land transfer duty amount is calculated as the price.
Then the transfer of land documents takes place in which the ownership is transferred from the seller to the home buyer.
How to prepare for property settlement?
Understanding the property settlement process and how to negotiate the date is important. If you’re doing it for the first time, you must go through these first-home buyer tips to go smoothly. The following are a few tips that will help you (the home buyer) prepare for settlement:
- Contact the legal and financial representatives during the settlement
- Have an agent to act on your behalf for the settlement
- Negotiate the settlement date before signing the contract of sale
- Check the correct settlement date (which you and the seller should agree upon)
- Collect and organise all the amount needed to complete the purchase and for the settlement
- Get the chance to complete the final inspection of the property
Conclusion
The property settlement process is complex, but having a good agent by your side can help you have a smooth property settlement process. A skilled solicitor or settlement agent will consider your best interests and ensure the process takes place successfully.
